Bidder Earnings Management, Cynical Targets and Acquisition Premia

Mergers and acquisitions are the result of negotiations between bidder and target managers and shareholders where both sides have incentives to manipulate the value of shares and assets. While a naive target investor may perceive higher share value for a bidder who engages in income increasing earnings management, an informed target would recognize that the impact of such management is transient. In this paper, we find that non-cash acquirers that adopt income-increasing pre-merger earnings management pay higher acquisition premia in completing their M&A deals. However, there is no significant relationship between earnings management and acquisition premia in cash bids, and evidence suggests that there is no significant incremental impact of bidder earnings management on premia for stock transactions versus cash transactions. Our results support the cynical investor hypothesis, which posits that target management and its financial advisors are suspicious of bidders with low earnings quality and are able to detect and thwart bidder earnings management schemes designed to obtain a lower acquisition price in stock transactions. The results are counter to the naive investor hypothesis

Auditor liability and excess cash holdings: Evidence from audit fees of foreign incorporated firms

Auditors of foreign cross-listed firms face liability arising from the nature of the institutional monitoring framework of legal claims that can potentially be brought against the auditor in both the home country and the US. This paper is the first to document the relationship between auditor liability and auditor pricing of excess cash holdings for foreign firms cross-listed in the US. Our findings indicate that auditors demand a fee premium for foreign incorporated clients with greater excess cash holdings, consistent with auditors recognizing the potential for legal exposure to agency conflict arising from foreign listed US traded clients. Furthermore, we examine aspects of foreign capital market protections, such as disclosure requirements, the strength of legal enforcement, and the strength of shareholder rights to better understand auditor perception of the liability they incur due to the agency costs associated with excess cash holdings. We find that there is a significant positive association between audit fees and excess cash holdings for firms where the country of incorporation permits greater liability of auditors in criminal and civil litigation. In addition, auditors assign higher audit fees to firms holding greater excess cash incorporated in countries with greater required accounting disclosure, stronger legal enforcement and stronger shareholder rights

KEAP1-modifying small molecule reveals muted NRF2 signaling responses in neural stem cells from Huntington's disease patients

The activity of the transcription factor nuclear factor-erythroid 2 p45-derived factor 2 (NRF2) is orchestrated and amplified through enhanced transcription of antioxidant and antiinflammatory target genes. The present study has characterized a triazole-containing inducer of NRF2 and elucidated the mechanism by which this molecule activates NRF2 signaling. In a highly selective manner, the compound covalently modifies a critical stress-sensor cysteine (C151) of the E3 ligase substrate adaptor protein Kelch-like ECH-associated protein 1 (KEAP1), the primary negative regulator of NRF2. We further used this inducer to probe the functional consequences of selective activation of NRF2 signaling in Huntington's disease (HD) mouse and human model systems. Surprisingly, we discovered a muted NRF2 activation response in human HD neural stem cells, which was restored by genetic correction of the disease-causing mutation. In contrast, selective activation of NRF2 signaling potently repressed the release of the proinflammatory cytokine IL-6 in primary mouse HD and WT microglia and astrocytes. Moreover, in primary monocytes from HD patients and healthy subjects, NRF2 induction repressed expression of the proinflammatory cytokines IL-1, IL-6, IL-8, and TNFα. Together, our results demonstrate a multifaceted protective potential of NRF2 signaling in key cell types relevant to HD pathology

TRY plant trait database – enhanced coverage and open access

Plant traits - the morphological, anatomical, physiological, biochemical and phenological characteristics of plants - determine how plants respond to environmental factors, affect other trophic levels, and influence ecosystem properties and their benefits and detriments to people. Plant trait data thus represent the basis for a vast area of research spanning from evolutionary biology, community and functional ecology, to biodiversity conservation, ecosystem and landscape management, restoration, biogeography and earth system modelling. Since its foundation in 2007, the TRY database of plant traits has grown continuously. It now provides unprecedented data coverage under an open access data policy and is the main plant trait database used by the research community worldwide. Increasingly, the TRY database also supports new frontiers of trait‐based plant research, including the identification of data gaps and the subsequent mobilization or measurement of new data. To support this development, in this article we evaluate the extent of the trait data compiled in TRY and analyse emerging patterns of data coverage and representativeness. Best species coverage is achieved for categorical traits - almost complete coverage for ‘plant growth form’. However, most traits relevant for ecology and vegetation modelling are characterized by continuous intraspecific variation and trait–environmental relationships. These traits have to be measured on individual plants in their respective environment. Despite unprecedented data coverage, we observe a humbling lack of completeness and representativeness of these continuous traits in many aspects. We, therefore, conclude that reducing data gaps and biases in the TRY database remains a key challenge and requires a coordinated approach to data mobilization and trait measurements. This can only be achieved in collaboration with other initiatives

Large expert-curated database for benchmarking document similarity detection in biomedical literature search

Document recommendation systems for locating relevant literature have mostly relied on methods developed a decade ago. This is largely due to the lack of a large offline gold-standard benchmark of relevant documents that cover a variety of research fields such that newly developed literature search techniques can be compared, improved and translated into practice. To overcome this bottleneck, we have established the RElevant LIterature SearcH consortium consisting of more than 1500 scientists from 84 countries, who have collectively annotated the relevance of over 180 000 PubMed-listed articles with regard to their respective seed (input) article/s. The majority of annotations were contributed by highly experienced, original authors of the seed articles. The collected data cover 76% of all unique PubMed Medical Subject Headings descriptors. No systematic biases were observed across different experience levels, research fields or time spent on annotations. More importantly, annotations of the same document pairs contributed by different scientists were highly concordant. We further show that the three representative baseline methods used to generate recommended articles for evaluation (Okapi Best Matching 25, Term Frequency-Inverse Document Frequency and PubMed Related Articles) had similar overall performances. Additionally, we found that these methods each tend to produce distinct collections of recommended articles, suggesting that a hybrid method may be required to completely capture all relevant articles. The established database server located at https://relishdb.ict.griffith.edu.au is freely available for the downloading of annotation data and the blind testing of new methods. We expect that this benchmark will be useful for stimulating the development of new powerful techniques for title and title/abstract-based search engines for relevant articles in biomedical research.Peer reviewe

Born globals, the choice of globalization strategy, and the market's perception of performance

This paper analyzes which characteristics of born global firms determine their choice for international entry mode. Using a logistic regression analysis, we study 124 newly public firms in the United States that undertake 261 international joint ventures or international acquisitions within the first 6 years of their founding. We find that the market responds positively to announcements of international expansions by born global firms, and that larger, more profitable, and more liquid firms have a higher propensity to engage in joint ventures rather than acquisitions. We also find that the market favors firms that announce joint ventures, rewarding them with significantly positive abnormal returns. Furthermore, while we find that cultural similarity affects mode choice, it does not affect the market's reaction to the announcements.Born global Acquisition Joint venture Event study

Operating characteristics, risk, and performance of born-global firms

Purpose – To determine what characteristics distinguish firms that conduct international business within three years of going public and six years from founding, and how these firms perform. Design/methodology/approach – A logistic regression analysis is used to identify characteristics that distinguish firms that are international at the time they go public, versus those that are not. The paper also assesses post-IPO performance and apply multivariate analysis to determine how performance varies among these firms. Findings – Compared to firms of similar age who do not pursue rapid internationalization, born-global firms are generally larger, more diversified, and have more venture capital backing. Their founders, board members and managers exhibit more international experience. The returns 12 and 18 months post-IPO are significantly higher for born-global firms than for a control sample of firms who do not engage in rapid internationalization. Furthermore, those born-global firms with joint ventures or acquisitions in several countries perform better than those that only export within the first six years since their inception. Research limitations/implications – Managerial implications include having a board of directors with sound international business experience as well as using a venture capital firm to provide monitoring and oversight of operations at home and in the foreign market. Originality/value – This paper is original in that it is the first to provide a financial markets-oriented empirical investigation of the “born-global” phenomenon using a sample of newly public American firms.Globalization, International business, Multinational companies, United States of America

Accounting for Emissions: Evidence from Auditor Pricing of Climate Change Risk

We investigate whether, and how, auditors price risks related to greenhouse gas emissions (GHG) for a sample of firms traded in the US that disclose their CO2 emissions data. Specifically, we assess whether auditors price CO2 physical and transition risks among multiple categories of emission measures as auditor business risks. After controlling for audit fee determinants, we find that auditors assign a fee premium in the presence of greater total and direct emissions measures, signifying auditor perception of greater risk arising from higher emitting clients. Our findings are robust to alternate specifications (endogeneity, headquarter state membership in a cap and trade agreement, the Paris climate change agreement). Our paper contributes to the literature by shedding light on whether and how auditors respond to emissions information through their pricing decision